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“Flags go up, walls are painted, and hundreds of thousands of loud speakers play-out the loud exhortations and extravagant promises. VIPs and VVIPs come and go, some of them in helicopters and air-taxis. The political parties in their quest for power spend more than thousand crore of rupees on the General Election (Parliament alone), yet nobody accounts for the bulk of money so spent and there is no accountability anywhere. Nobody discloses the source of the money. There are no proper accounts and no audit. From where does the money come nobody knows? In a democracy where rule of law prevails this type of naked display of black money, by violating the mandatory provisions of law, cannot be permitted…”                          Supreme Court in 1996

1. Introduction: (01:02)

Hello, everyone! My name is Shivani Kapoor. Welcome to the 14^th episode of our podcast series. This episode will focus on “ Abuse of money power in our electoral and political process: The problems, why there is a need for accountability and transparency, critical analysis and recommended reforms.”

1. Background and Over-view: (01:25)

The Government “by the people” “for the people” and “of the people” should deliver an ideal governance but the reality is extremely harsh. Good governance demands true and informed choice by the voters at the time of elections and not the one swayed by money. The democratic process can function efficiently and effectively, for the benefit of the common good only if it brings about a participatory democracy in which every man and woman, howsoever lowly or humble he/she may be, should be able to participate on a footing of equality with others. Free flow of money in elections or immediately preceding the elections is a hard reality deeply ingrained in our current electoral and political scenario. The rival contestants and parties are outbidding each other in this naked display of money. The spectre of corruption and hoodwinking of the innocent, gullible voters hangs over our electoral processes. Resultantly, corrupt politicians are not only getting repeatedly elected but they also happen to occupy decision making positions in the governance of the country.

According to the ‘National Commission to Review the Working of the Constitution Report’, “The paradox of India, is that in spite of a vigilant press and public opinion, the level of corruption is exceptionally high.  This may be attributed to the utter insensitivity, lack of shame and the absence of any sense of public morality among the bribe-takers.  Indeed, they wear their badge of corruption and shamelessness with equal élan and brazenness.”  

1. Shocking facts: (03:12)

Money cannot be allowed to dominate the process so much that only the rich can contest and hijack the political system let us hear some shocking facts

• According to the Centre for Media Studies (CMS) in its report titled “Poll Expenditure: The 2019 Elections”, a staggering Rs 55,000-60,000 crore was estimated to have been spent during the 2019 Parliamentary elections. The Lok Sabha,2019 elections have been termed as the ‘most expensive election ever, anywhere’ with an estimated Rs 100 crore spent in each Lok Sabha constituency and an approximate Rs 700 spent per vote. 40% or Rs 24,000 crore was spent by candidates while parties had spent an estimated Rs 20,000 crore (35%). Overall, expenditure in the last six Lok Sabha elections between 1998 and 2019 had seen a near six-fold jump from Rs 9,000 in 1998 to over Rs 55,000 crore in 2019. It was Rs 10,000 crore in 1999, Rs 14,000 crore in 2004, Rs 20,000 crore in 2009 and Rs 30,000 crores in 2014 Lok Sabha Elections.

• The Election Commission of India (ECI), beginning 26^th March, 2019, published seizure reports highlighting the amount of cash, liquor, drug/narcotics, precious metals, freebies etc. seized during the campaigning period each day. The total seizure reported by the ECI at the end of elections was a monstrous Rs 3475.76 crore with drugs/narcotics topping the list at Rs 1279.90 crore followed by precious metals (gold etc.) at Rs 987.11 crore, Rs 844 crore worth of cash, Rs 304 crore worth of liquor and other items or freebies worth Rs 60 crore. During Lok Sabha 2014 elections, Election Commission had reported seized around Rs.300 crores of unaccounted cash and more than 17,000 kg of drugs and huge amount of liquor and arms.

• Lok Sabha 2019 elections also witnessed the highest ever anonymous funding through Electoral Bonds. Between FY 2017-18 & 2018-19, political parties received a total of Rs 2,760.20 cr from electoral bonds.

• National parties have received the maximum corporate donations of Rs 881.26 cr in the FY 2018- 19 .The amount was Rs 563.19 cr in FY 2016-17 and Rs 573.18 cr in the FY 2014-15 (during which the 16th Lok Sabha elections were held). Between FY 2012-13 and 2018-19, donations from corporates to National parties increased by 974%.

• As per the data analysed by ADR, 475 of the current Lok Sabha MPs are crorepatis. It was (443) in Lok Sabha 2014 and (315) in Lok Sabha 2009. Even with respect to the Rajya Sabha, out of the 229 sitting Rajya Sabha MPs analysed by ADR, 203 (89%) are crorepatis.

1. Reasons behind abuse of money power in our electoral and political process: (06:56)

• Most politicians and political parties are not interested in honest money funding for elections. Honest money entails Honest money restricts spending within legally sanctioned limits.
• Through Finance Acts, 2017 &18 the government of the day has facilitated some illegal and illicit ways of funding by introducing Electoral Bonds and unlimited corporate donations which will have serious repercussions on the Indian democracy. Electoral bonds and unlimited/anonymous corporate donations can be termed as the biggest blunder in political party finances and funding which will adversely affect Indian Democracy. Instead of making our politicians and political parties answerable and accountable, such amendments have only caused annoyance, inconvenience, obstruction to the citizens at large by withholding crucial public information from them regarding electoral funding.
• Despite the repeated reminders sent by the Election Commission, political parties do not submit their contributions reports, election expenditure statements within the stipulated time. It has been observed that the national and regional parties regularly default in filing their expenditure statements within the specified time limits. The website of the Election Commission of India provides scanned copies of reminders sent to the political parties for defaulting in their submission.
• Today, political parties are not required to disclose the source of any contribution or donation which is less than Rs. 20,000. There are instances of parties which declare donations worth hundreds of crores (yes, hundreds of crores), claim and get income tax exemptions on that, and do not disclose the source claiming that each of the donations was less than Rs.20,000.
• It’s no secret that political parties have become a breeding ground for money. There is a strong nexus between money and muscle where only money and mafia will get the tickets to contest elections. There are parties which do not even contest elections and are formed solely for the purpose of money-making. In fact, on 21^st December, 2016 the Election Commission of India had delisted 255 political parties from the list of registered unrecognized political parties that had not contested elections at all. After this round of de-listing, the number had gone down from 1786 to 1500 in January,2017.
• As of now EC data shows that only 37 new parties were registered between January and November 2017. But the number of parties rose significantly to 2,069 by 20 June 2018 and 2,143 by 15 October, 2018. By 15 March 2019, the number of registered unrecognised parties rose to 2,301. Between 1 April and 19 August 2019, India got 93 new parties. Another 20 names were added between 25 September and 5 November 2019. As of 30^th September, 2020, the total number of political parties in India has increased to 2628. The reason for this glut of new parties definitely points out the needle of suspicion towards government’s controversial electoral bonds scheme. A vast majority of these parties will never contest elections. They may simply be using their status to turn black money into white. Some of these parties could also be involved in money laundering operations. Therefore, the only plausible reason behind mushrooming of these dormant parties are (i) 100% tax exemption, (ii) need for declaring only those donations above Rs. 20,000, iii) unknown and anonymous funding through EBs , iv) unknown and anonymous corporate donations and (v) restriction of ECI from de-registering a party.
• The ECI does not have powers to de-register a partyeven when it doesn’t demonstrate any semblance of political activity- the very purpose for which it got registered with ECI at the first place.  While Section 29A of the RP Act provides for procedure of registration of political parties, however, it does not expressly confer any power on the Election Commission of India regarding de-registration of political parties. For last 20 years ECI has been asking for amending the RP Act and give the Commission the appropriate authority to de-register a political party. In fact, in 1998 the Commission had written to the Union Law Ministry and urged the necessity of giving it the power in view of the fact that many political parties get registered, but never contest election.
• There is no CAG audit of political parties account statements. There is no law for regulating the functioning of political parties. There is no way to penalize the office bearers of the political parties in case of any conflict or contravention with rules or laws. Political parties have blatantly refused to come under the ambit of RTI law.
• There is no well-defined process in the selection of candidates by the political parties. Tickets are given to the candidates for contesting elections on the sole basis of winnability factor. Historically, it has been observed that muscle power and money power make a winning combination. It is a known fact that office bearers like President, General Secretary, Vice- President etc. are the main decision makers of political parties and have a major say in the allocation of tickets to candidates to contest elections.
• The reluctance and attitude of politicians and political parties to bring any form of reform within their functioning is no hidden secret. In fact, such continuous averseness of the existing political establishments to introduce transparency and accountability has only permitted corruption to percolate further in the electoral process. Over a period, we have observed burgeoning election expenditure, political party funding, and inadequate reporting and disclosure laws. Sometimes black money is generated by business houses and individuals to evade corporate and income taxes, later it is pumped back to political parties and candidates to garner favourable policy decisions. In our electoral and political system, those who are willing and are able to utilize black money, dominate politics.
• The political establishments have completely disregarded or intentionally side-lined the reforms suggested by various committees, citizens and civil societies. It is on record that various recommendations given by several committees dated as back as 1999 are lying in the back burner.
• Answer also lies in the short-sightedness of the voter, who cares more about living in the present even at the cost of an uncertain future and the sole objective of the political parties and government to get re-elected, often by changing the nature and packaging of these freebies, bribe as the situation demands.

1. Steps taken by ADR: (14:42)

Way back in 1999,the first step in direction of  free and fair elections, good governance was taken by ADR through petitions filed in the Delhi High Court, Supreme Court the result of which is that now the candidates contesting elections for the Parliament and State Assemblies are mandatorily required to submit affidavits along with their nomination papers giving information about financial assets of the candidates, his/her spouse and dependents financial liabilities; criminal cases pending against candidates and educational qualifications of the candidate. Since then, ADR has filed petitions and intervened in many such important causes. Few such efforts are;

• In 2008, in an appeal filed by ADR, T returns of the political parties were brought in the public domain by CIC.
• In 2011, in an appeal, ‘Register of members interest’ of the Rajya Sabha members was brought in the public domain by the CIC.
• In 2013, in a complaint filed by ADR, the CIC declared six national political parties, namely the INC, BJP, CPI(M), CPI, NCP and BSP to be “Public Authorities” under Section 2(h)(ii) of the RTI Act
• In 2014, ADR's petition resulted in a landmark judgement from the Delhi HC which held BJP and Congress guilty of taking foreign funding and violating the provisions of FCRA and directed the Home Ministry and ECI to take action against the two parties within six months.
• In 2014, Supreme Court held that ECI has powers to disqualify a candidate in relation to filing of false election expenditure statement under Section 10A.
• In 2017, the Supreme Court added ‘sources of income’ column of the candidates and spouse in Form 26 including a permanent mechanism for scrutiny of affidavits of the winners.
• Association for Democratic Reforms (ADR) has already filed a petition in the Supreme Court to bring political parties under the ambit of RTI Act.  ADR has also challenged in the Supreme Court amendments brought to the Foreign Contribution (Regulation) Act, 2010 & 1976 respectively that changed the definition of a “foreign source” to quietly let BJP and the Congress off the legal hook of the Delhi High Court judgment where they were found guilty of taking foreign funding.  ADR has also challenged the Finance Act, 2017 enacted as Money Bill which had introduced a system of electoral bonds and unlimited and anonymous corporate donations. A petition has been also filed in the Delhi High Court for the regulation and monitoring of election expenses of political parties and to also have a limit on the election expenditure of political parties.

1. Immediate need of the hour: (18:02)

• It will be a fallacy to hold that transparency is good for all State organs, but not so good for our politicians and political parties, which control the most important of those organs. Like I had said earlier, electoral and political reforms demand politicians and political parties to be absolutely transparent and accountable, that there is a level playing field during elections, that tickets are given on the basis of merit and credibility, that there is complete disclosure of donations, sources of funds, income and expenditure, criteria for ticket distribution, inner party elections, information about office bearers.
• Bad laws like electoral bonds, unlimited corporate donations, FCRA amendments should be completely scrapped and held unconstitutional.
• There should be a limit on the election expenditure of political parties.
• Even donations below Rs 20,000 should be reported.
• There should be a separate column for income from sale of coupons
• Similar to Section 276CC of the IT Act which penalizes individuals who fail to submit their IT returns, similar legal provisions should be applicable to political parties too.
• As per the recommendation of 255^th Law Commission report, “Express penalties, apart from losing tax benefits, should be imposed on political parties … for the non-compliance with the disclosure provisions …. This should include a daily fine of Rs. 25,000 for each day of non-compliance, with the possibility of de-registration if the default continues beyond 90 days. Further, ECI may levy a fine of up to Rs. 50 lakhs if it finds any particulars in the party’s statements as having been falsified.”
• Political should parties should respect and abide by the 3^rd June,2013 CIC order in its letter and spirit by bringing themselves under the ambit of RTI Act.
• T Returns of MPs and MLAs should also be made available in the public domain.
• The current time period of 30 days for submission of election expenditure details by candidates should be reduced to 15 days.
• As per the 16^th February, 2017 SC order, ECI and CBDT should strictly cross-verify the dubious multiplication of assets of the Parliamentarians.
• There should be a CAG audit of the political parties’ income, expenditure and contribution statements.
• Cancellation of tax exemption to political parties in case of default.
• Bribery should be made a ground for disqualification.
• Election Commission of India should be given powers to de-register a political party and, further, should be authorised to issue necessary orders regulating registration and de-registration of political parties, particularly in view of its constitutional mandate under Article 324.
• ECI should make its reports public on search and seizure of cash, liquor narcotic drugs etc during each election, complete party wise, state wise break-up. ECI should also take action taken against such parties and candidates and share it in the public domain.

Conclusion: (21:33)

Therefore, in order to fix the system, to contain corruption and to bring complete transparency and accountability in political party finances, to check dubious multiplication of assets of the MPs/MLAs, need of the hour is “every single penny accumulated, collected and spent by political parties and candidates should be accounted for.” That is the ONLY solution.

That’s all for today’s episode. I hope you all found this useful and interesting. If you like our work, make sure you subscribe to the podcast on our website: adrindia.org and don’t forget to write to us at [email protected] with your feedback. We will be back in two weeks with another amazing episode. Please stay tuned and thank you for listening.

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